Volvo shares down on rumor of share issue
(chinatrucks.com, Jan.14, 2010)Volvo, the world's number two truck maker, said it would not comment on rumors that it may be preparing a share issue and referred to previous comments that a cash call was not needed.
"What we established at the Q3 report was that, as the situation is right now, we see no need for a share issue, and there is nothing new to add to that," said Marten Wikforss, Head of Volvo Group Media Relations.
"We never comment on rumors," he added.
Earlier on Tuesday, investment company Industrivarden announced plans to launch a 450 million euro ($653 million) convertible bond to strengthen its liquidity and increase its financial flexibility to "capture attractive investment opportunities."
"There is no link to Volvo -- I can definitely say that," Industrivarden Chief Executive Anders Nyren told Reuters.
Still, traders said the move sparked rumors that the investment firm, which owns 3.4 percent of Volvo capital and 8.6 percent of the votes, could be preparing to participate in a cash call by the Swedish truck maker.
Volvo shares traded down 2.09 percent at 65.50 Swedish crowns by 1006 GMT.
"It has been discussed a lot whether raising capital has been needed for Volvo, but that Industrivarden hasn't had the money. Now they are raising money to take part in this rights issue. That is how the market is reasoning," said an analyst in Stockholm.
However, the analyst said he didn't believe this was the case and that Industrivarden was more likely looking for new investment opportunities.
"There has been a lot of discussion about a Volvo rights issue. I don't believe it is very likely that they would do it now. It is not more likely than before," he added.
By 0945 GMT, the volume of Volvo shares traded was already 51 percent of the stock's 90-day average daily volume, compared with 21 percent for Europe's benchmark FTSEurofirst 300 .FTEU3 index.
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